SWITZERLAND - A referendum against a cut in the conversion rate of the Swiss mandatory second pillar pension regime will most likely happen before Christmas.

Over 200,000 people have signed a petition in support of a referendum against Swiss government's plans to cut the conversion rate used for calculating pensions to 6.4% by 2015. (See earlier IPE story: ASIP supports cut to conversion rate

The government will now have to set a date for the referendum, the outcome of which is binding.

"We know it will not take place before the winter and November 29 seems the most likely date," a spokesman for the Swiss Social Democrats - one of the parties which supported the referendum - told IPE.

He explained there were four fixed dates for referendums in Switzerland each year and the November date was the first free date available.

That said, it could that the referendum on the conversion rate is postponed until early next year though, unlike other referendums, this one does not need preparation time for a paper or a demand as a 'yes' vote would stop a law from being put in place.

"And there is interest in dealing with this issue as soon as possible," confirmed the Social Democrats spokesman.

Both the representative body for Swiss insurers, SVV, and the association for Swiss companies, Economiesuisse, are supporting a cut in the conversion rate.

Economiesuisse argued the current conversion rate of 7% for women and 7.05% for men together with the financial crisis had already left several pensionskassen underfunded so not cutting the rate would be seen as adding to their problems. (See earlier IPE article: Swiss funding levels deteriorate in three months)

BSV, the Swiss federal social department, said statistics suggest a minimum return of 4.9% was necessary to guarantee a conversion rate of 6.8% - the original level to which the rate should have been gradually cut gradually.

"With the new minimum conversion rate of 6.4%, the necessary return expectation goes down to 4.3%," which is a "realistic" aim without taking too much risk in the portfolios, according to the BSV.

The SVV has criticised Swiss left-wing politicians for talking about "stealing pensions" in connection with the conversion rate cut.

"The complexity of the issue and the low level of knowledge among the people makes it harder to form an opinion," argued the SVV.

The association cited a 2007 poll which suggested 53% of the Swiss population did not know what the conversion rate was.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com